Abstract

This paper examines positive externalities and complementarities between countries in the use of antiviral pharmaceuticals to mitigate pandemic influenza. It demonstrates the presence of treatment externalities in simple SIR (susceptible-infectious-recovered) models and simulations of a Global Epidemiological Model. In these simulations, the pandemic spreads from city to city through the international airline network and from cities to rural areas through ground transport. While most treatment benefits are private, spillovers suggest that it is in the self-interest of high-income countries to pay for some antiviral treatment in low-income countries. The most cost-effective policy is to donate doses to the country where the outbreak originates; however, donating doses to low-income countries in proportion to their populations may also be cost-effective. These results depend on the transmissibility of the flu strain, its start date, the efficacy of antivirals in reducing transmissibility, and the proportion of infectious people who can be identified and treated.

The world experienced four influenza pandemics in the last 100 years; the deadliest of these, in 1918, killed roughly three percent of the world’s population. An influenza pandemic is still a threat: the relatively mild 2009 H1N1 strain spread rapidly through the global transportation network, long before a vaccine was available. Antiviral drugs can help slow the spread of a pandemic and reduce the numbers of cases, but many low-income countries cannot afford to purchase and stockpile these drugs.

While wealthy countries can use antivirals to reduce their own rates of infection, could supplying additional doses to low-income countries during a pandemic result in even lower infection rates in wealthier nations? Can a purely economic case be made for wealthy countries to provide treatments to lower-income nations?P>

In “Policy Response to Pandemic Influenza: The Value of Collective Action,” RFF Senior Fellow Maureen Cropper and coauthors attempt to answer this question. Their study simulates scenarios in which high-income countries distribute stockpiles of antivirus in low-income countries, and shows that this policy can make both groups better off. They find that the most effective policy is to provide antivirals in the outbreak source country, but that making doses available to other low-income countries can also be effective. Their results also highlight the importance of pandemic surveillance systems and treatment delivery systems in containing or mitigating a pandemic.

Shell Oil Company is seeking permits to drill exploratory oil wells in Arctic waters off the northern shores of Alaska. In light of the recent Deepwater Horizon oil spill in the Gulf of Mexico, does expanded Arctic oil drilling and production make economic sense for the United States? What effect would Arctic oil have on U.S. energy security, and what social costs and benefits would come into play if new drilling permits are granted?